Fear of Falling

By Craig Colgan

Board tension, an expensive buyout of the superintendent, a protracted search for a replacement, depleted reserves. As Oregon's largest school district entered the 2002-03 school year, things couldn't get much worse.

But they did.

In what has become a week-to-week fiasco that is being watched closely by much of the country's K-12 education universe, the Portland school district appears mired in a financial black hole. A shortfall in state revenues forced a $21 million cut in the district's $360 million budget. Things got so bad at one point that the district announced it was considering ending the school year five weeks early.

The year will end as scheduled: A last-minute tax hike for local businesses, plus an extraordinary deal with teachers who agreed to work 10 days for free, prevented Portland schools from lopping off those 24 school days. But next year could be worse for the beleaguered 53,000-student district. The district is facing a $30 million to $50 million shortfall that is likely to lead to school closings, staff reductions, and increases in class size.

As states battle what is called the most serious fiscal crisis in more than half a century, Portland's problems illustrate a triple whammy that is hitting school districts around the nation: severely reduced revenues; outdated and cumbersome funding formulas; and the fallout from fiscal mismanagement and inconsistent leadership.

In one recent count, 26 states have trimmed funding for Medicaid, public schools, higher education, or various social programs. More are expected to make cuts in those areas for 2004. And at least 15 states are talking about increasing sales and income taxes to raise an additional $14 billion.